China: Health, economy, geopolitical crisis, Xi Jinping’s impasse

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The Chinese economy is a great testament to the speed at which the world today can change. Meanwhile, Beijing, the biggest winner of the 2020 Covid crisis, seems to have had unparalleled instability since Xi Jinping came to power in 2022. Underlying the sudden reversal of this situation are four accompanying denials on the part of the government, which lead to four crises: health, geopolitics, real estate and the economy.

First, the denial of the ineffectiveness of the Chinese vaccine against Covid-19. Even today, refusing to approve BioNTech technology, licensed by China’s Fosun Group, binds the government to its sterile “zero corona” policy. Repeated imprisonment has now proved even more unacceptable, as it confuses nearly half of China’s GNP and identifies only a few cases in which more than 90% are asymptomatic. Therefore, they enable the United States to regain its dual position as a planetary leader in the field of global growth locomotives and health.

Second, a denial of the perhaps sacred principle of respecting borders during the Ukrainian crisis. They are 141 UN member states that recalled their visceral attachment to this fundamental right when China refrained from standing by. These 141 countries will undoubtedly ask some future questions before approving China’s attempt to establish world re-globalization, especially with the aim of dewesting the planet.

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Therefore, Beijing must sooner or later be prepared to face incompatibilities between Vladimir Putin’s “unlimited friendship” against war crimes and the 700 billion trade surplus that took place primarily in the West. prize. Exports to Europe and the United States, which are constantly being tempted by new sanctions, have threatened China’s economy’s main source of growth for over a year.

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National attack on the private sector

In addition to this, there was a denial of the real estate crisis, and due to the arrogance of regulators, beyond the initially isolated Evergrande case, to nearly 35 promoters suspended from the Hong Kong Stock Exchange. It will be possible to expand. Extension of their listener’s resignation. What to do after a failed camouflage attempt through a merger with state officials? Beijing can choose a “claim and expansion” solution and seek to spread the expected loss of about 10% of GNP over the next decade through the establishment of a land company. This will cut off all future economic growth in China.

Finally, the denial of private sector interests. It’s creating all new jobs, but for almost nine months it hasn’t stopped suffering a full-scale regulatory attack on the state in areas far beyond education, video games, health, or finances.

Alibaba Group’s recent announcement of an impressive $ 25 billion share buyback program will further aggravate investor anxiety. Rather, they saw it as a desperate way to escape future government ransom and realized that investing in artificial intelligence (an important sector to add value to Chinese industry) would not fulfill its promise.

Hope to take into account economic instability

But Chinese history tells us that these stages of stubborn denial will always end, as Liu He, the very realistic deputy prime minister in charge of the economy, promised in mid-March. Respected the current Chinese in the West. With the sudden acceleration of the collapse of China’s stock market, he did publicly announce and very urgently expressed his support for the economy. Words that remain to this day without taking specific measures.

However, we hope that President Xi Jinping’s election deadline for the third term next fall will soon take into account concerns about current economic instability. Important is the relative relief of health constraints, the temporary relief of diplomatic tensions with the United States, the systematic support of the real estate industry, and the resumption of necessary private sector financing. It is enough for Liu He to be able to temporarily wear “Deng Xiaoping’s new clothes as his comrade”, almost half a century away, far from denial and stubbornness.

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David Babeles Is an investor and has been based in Hong Kong for 10 years.He is the author of China-Europe: A big turning point (Le Passeur Publisher, 2021).


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